Xi writes to Modi, Foreign Ministers speak, and is Tech China turning away from India?

Welcome to today's issue.

It's been an unexpectedly busy day on the India-China front amid the continuing Covid-19 surge in India that shows no signs of abating. Hopefully the peak arrives soon and we come out of this quickly.

In this issue, I'll be looking at:
- Xi Jinping's message to Prime Minister Modi today
- Also today, a telephone call between Foreign Ministers Jaishankar and Wang Yi
- An update on the border situation
- China's Defence Minister in Bangladesh and Sri Lanka with an interesting message
- Are China's tech companies turning away from India amid the downward slide in relations?

Xi Jinping's message to Modi today to express sympathy over the surge is the first communication that we know of between the two since the pandemic began and the border crisis of 2020. The last time they met was in October 2019 in Chennai when the second 'informal summit' was held. How times have changed since.

His message, via Xinhua:

Chinese President Xi Jinping on Friday sent a message of condolences to Indian Prime Minister Narendra Modi over the COVID-19 pandemic in the country.

In the message, Xi said China is willing to strengthen anti-pandemic cooperation with India, and provide support and help to the country.

Noting that he is very concerned about the pandemic situation in India, Xi, on behalf of the Chinese government and people as well as in his own name, expressed sincere sympathies to the Indian government and people.

The human race belongs to a community with a shared future, Xi said, adding that only through solidarity and cooperation can all countries across the world defeat the pandemic finally.

Xi said he believes that under the leadership of the Indian government, its people will surely overcome the pandemic.

Foreign Minister Wang Yi also sent a message yesterday to his counterpart, External Affairs Minister Jaishankar, and they both spoke on the phone today. From the MEA’s readout:

The External Affairs Minister had a phone conversation this evening with the State Councilor and Foreign Minister of China, H.E. Mr. Wang Yi. The call was arranged at the request of the Chinese side to convey their sympathy and solidarity with India at this juncture….

External Affairs Minister highlighted in this regard that Indian entities were already in the process of commercially procuring required products and raw materials from suppliers in China. The Minister said that this process would be facilitated if various transport corridors and cargo flights remained open and the necessary logistics support ensured expeditiously. The Minister emphasized that serious challenges such as the COVID-19 pandemic, which had affected all countries, required serious international cooperation.

The border issue figured as well, a reminder that the LAC crisis remains on-going and unresolved:

The two Ministers also discussed the outstanding issues related to disengagement from all friction points along the Line of Actual Control (LAC) in Eastern Ladakh. External Affairs Minister conveyed that while the process of disengagement had commenced earlier this year, it remained unfinished. He emphasized that it was necessary that this process be completed at the earliest. Full restoration of peace and tranquility in the border areas would enable progress in the bilateral relationship. The two Ministers agreed to continue further dialogue at the official level on this matter.

From the readout from China’s Ministry of Foreign Affairs:

Wang Yi said that in order to further support India’s fight against the epidemic, China is willing to take the following measures according to India’s needs: First, continue to encourage and support Chinese companies to speed up production and provide India with anti-epidemic materials. The second is to facilitate customs clearance and transportation for India to purchase anti-epidemic materials. The third is to organize video exchanges between health and epidemic prevention experts from the two countries to share anti-epidemic experience and effective practices.

China’s envoy to India, Sun Weidong, tweeted on the goods India is procuring from China at the moment:

COMMENT: “Supplied” doesn’t mean donated. These are straightforward purchases by companies that would have ordinarily been only referenced in routine trade data. But these aren’t ordinary times and it seems Beijing is keen to be seen to be involved in the global aid effort currently underway, even if these are commercial transactions. Not that one can be too hard on them alone for this gentle blurring between sales and grants in these times, considering the other commercial transactions these days, for instance when it comes to the sale of vaccines, have been readily being framed as goodwill gestures, including by Delhi...

An interesting take in the Indian Express on how India has shifted its policy on accepting gifts and aid:

In what marks a major shift in policy in 16 years, India has now started accepting gifts, donations and aid from foreign nations as the country reels under a massive shortage of oxygen, drugs and related equipment amid a surge in Covid cases…

There have been two other changes in approach that signal this shift. India now has “no conceptual problem” in procuring oxygen-related equipment and life-saving medicines from China, a source said, adding that on Pakistan, New Delhi has still not made up its mind on whether to accept aid — though it is unlikely to accept it. Besides, state governments are also free to procure these life-saving devices and medicines from foreign agencies, and the Central government will not come in the way.

New Delhi’s nuanced change in approach towards procuring emergency supplies from China, especially oxygen-related devices, is significant considering the two countries have been at loggerheads over the border standoff.

COMMENT: “Nuanced” or is it just because we have no other choice and there’s nowhere else we can procure so much at such short notice?

Also Made in China — most of the oximeters we are using, reports The Print:

Although a major player in the pharma sector, India is heavily dependent on imports as far as medical devices are concerned.

Individual import figures for oximeters weren’t available on the Union Ministry of Commerce website but government data shows Chinese goods dominate India’s medical equipment purchases from abroad.

In the first 10 months of 2020-21, until January, India imported medical equipment worth $269 million from China. This translates to nearly a quarter of India’s total medical equipment imports for the period.

Safe to say the whole ‘decoupling’ thing is on pause. Customs in India that have since last year put in place stringent checks on lots of Chinese imports are now making exceptions, reports the Economic Times:

The second wave of the pandemic has brought a change to the way India’s customs department has been clearing Chinese medical equipment, especially devices used in the treatment and monitoring of Covid-19 patients.

Equipment such as oxygen concentrators, oximeters, ventilators, PPE kits and thermometers are being cleared on a priority and emergency basis, importers said. But non-medical devices coming from China continue to face delayed clearances…

The LAC situation, as we saw, figured in today’s phone call between the foreign ministers. Shiv Aroor has an update on the stalemate that’s been in place after disengagement at Pangong Lake, with no movement towards disengagement in Gogra, Hot Springs, Demchok and Depsang, and as Shiv tells us, more broadly no movement towards de-escalation either and in fact, what we are seeing is the opposite in depth areas:

A map of the spring 2021 reinforcement has also strengthened the view that China is in no mood to dial down its aggressive posture across from the Depsang and Daulat Beg Oldie areas of northern Ladakh.

Interestingly, the depth areas of Spanggur Tso, south of the Pangong lake have also been reinforced with permanent accommodations. This is adjacent to the sector where India had obtained a tactical advantage in the Kailash Range last August, forcing China into a stalemate.

While some of these needed to be abandoned as part of the February pullback, the Indian Army is understood to still hold similarly advantageous positions in other sectors at this time.

The celebrated February disengagement is also revealing the reality of Chinese intent. While Chinese troops and positions have moved beyond Finger 8 in the north Pangong sector, a bulk of the forces remains in the rear areas with elements of the 4th, 6th and 11th Motorised Divisions still present in those areas.

It must be said that there has been no reinforcement or strengthening of Chinese positions on the frontlines in any of the sectors, though that isn't surprising given that such a move would be seen as immediately belligerent.

China's quiet but aggressive reinforcement in depth areas, fully within view of the Indian military and intelligence agencies, comes just weeks after China showed surprising inflexibility during the last round of talks on April 9, at which time it virtually outright refused to discuss any pullback from the Gogra Post and Hot Springs friction points of the standoff area.

Lt Gen Rakesh Sharma (Retd.) in this piece (thanks to Sushant Singh for flagging this) clears up one misconception — the current problems in Depsang are not merely some legacy issue from 2013 as some in the Indian Government have been saying, he stresses, but certainly a new problem and should be acknowledged as such:

This would imply that minimum of eight to ten patrols per year from 2013-2019, would have roughed in the most difficult of terrain and weather conditions for five to six days of patrolling of PPs 10-13. Patrols face detailed debriefings, and copious patrols reports are duly vetted up the ITBP/Army Chains. These patrol reports would exist even presently. It implies that cumulatively over 2500 all ranks from ITBP and Army must have touched base at the PPs at Depsang, from 2013 to 2019. In addition ASO/ WASO, some with senior commanders, undertake regular missions, along the Limit of Patrolling (LOP).  

To now state that we were not able to reach our LOP since 2013 as PLA was blocking our movement, is pure heresy, and challenging integrity and honour of devoted ITBP/ Army soldiers, units formations and commanders up-the-chain! In fact similar to own movement, the PLA patrols would have also been attempting and reaching their claim line, say at Track Junction (near DBO) or close to ITBP post at Burtse. In 2020, however, as per open source, there is mutual block either side of Bottleneck on Raki Nalla, thereby denying Joint Indian patrols to reach LOP, as also PLA patrols to come towards Burtse.

China’s Defence Minister Wei Fenghe was in Dhaka and Colombo this week. Two messages that caught my eye in the Chinese readouts of both visits, one can take a guess what he had in mind…

In Dhaka:

To jointly maintain regional peace and stability, the two sides should make joint efforts against powers outside the region setting up military alliance in South Asia and practicing hegemonism, Wei said.

In Sri Lanka:

Peaceful development and win-win cooperation is the global trend and the right way forward, Wei said, adding that certain major countries are keen to form cliques and factions and seek regional hegemony, which goes against people's shared aspiration and severely harms the interests of the regional countries.

A detailed report in the Washington Post on labour abuses in Belt and Road projects:

Interviews with labor rights advocates and a dozen Chinese workers employed by state-owned companies and subcontractors reflect a pattern of abuse that threatens to undermine China’s ambitious bid for diplomatic and economic influence, a mission closely tied to the legacy of leader Xi Jinping. Many spoke on the condition of full or partial anonymity, fearing retribution.

New York-based China Labor Watch argues in a new report that overseas Chinese workers are victims of human trafficking and forced labor. Workers described being held against their will, forced to work while infected with the coronavirus and deceived into working illegally. Their passports were seized, they said, and most had gone months without pay. Some said they were beaten for protesting conditions or forced into “thought training.”

“The entire Belt and Road initiative is based on forced labor,” said Li Qiang, director of China Labor Watch, whose report was based on interviews with workers in six countries. “Chinese authorities want the Belt and Road projects for political gain and need to use these workers.”

And finally…

Nikkei reports on Alibaba’s Ant Group cutting its holdings of Zomato:

China's Ant Group cut its holdings of India's Zomato over the past year, reversing an earlier plan to boost its stake in the food delivery company, underscoring the dramatic shift in the countries' investment climates.

Alipay Singapore Holding, a subsidiary of Ant Group, cut its stake in Zomato to 558.9 million shares from 777.5 million shares a year ago, according to Zomato's draft prospectus filed on Tuesday. Alipay Singapore agreed to sell the shares in February and March to investment funds, including D1 Capital Partners and Steadview Capital, according to the prospectus.

The document also shows that a separate Ant entity, Antfin Singapore Holding, scrapped part of an agreement to invest $150 million in Zomato. Zomato said the parties "mutually agreed not to proceed with" two-thirds of the total.

The original agreement came in January 2020.

Zomato went on to raise hundreds of millions of dollars from other investors and plans to raise another 82.5 billion rupees ($1.1 billion) in its domestic initial public offering. Ant is currently still Zomato's second major shareholder, with a combined stake of 16.5%. A senior vice president of Ant sits on Zomato's board.

Zomato declined to comment. Ant did not immediately respond to a request for comment.

It is not unusual for investors in a company to sell a stake before the company goes public, especially when demand for the shares is strong. Founders who want to court new investors but do not want to dilute their ownership, for example, could opt for a mix of issuing new shares and a sale of existing shares by early investors.

Zomato was founded in 2010, and Ant made its first investment in 2018. Still, the development highlights the shift in investment appetite among Chinese tech giants in India.

Thank you for reading, and wish you a happy and safe weekend. Stay well.